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Jan 14, 2018 at 6:33 AM

“We are tired of being grossly underfunded, and our taxpayers are tired of being grossly overtaxed,” said James Lavender, superintendent at Kingsway Regional School District in Gloucester County, one of the ten districts that are part of the legal action, known as a petition of appeal against the Department of Education and its commissioner.

TRENTON — New Jersey on Tuesday will welcome a new governor who is inheriting a decades-old problem: how to adequately fund public education and fairly distribute billions of dollars in state aid to over 600 school districts.

The issue has been contentious for a while, and was central to the state budget dispute that led to a three-day government shutdown last summer and Gov. Chris Christie’s infamous photo-op on the beach.

And while lawmakers and Christie eventually reached a deal to end the shutdown that boosted state aid awards for many of the most underfunded school systems, several districts said they continue to be severely underfunded. As a result, their students are shortchanged and their residents overtaxed.

While Gov.-elect Phil Murphy has promised to make increasing school funding a top priority, Chesterfield and nine other underfunded districts have decided to move forward with legal action against the state Department of Education to demand fair distribution of aid for the upcoming school year.

The aid impacts more than just school programs and jobs. It's also one of the largest factors in how much homeowners and businesses are taxed through the state's notoriously high property taxes, which are the primary funding source for schools, county and municipal governments.

“We are tired of being grossly underfunded, and our taxpayers are tired of being grossly overtaxed,” said James Lavender, superintendent at the Kingsway Regional School District in Gloucester County, one of the 10 districts that are part of the legal action, known as a petition of appeal, against the Department of Education and its commissioner.

The effort was organized by the Newton public schools in Sussex County and also includes the Swedesboro-Woolwich School in Gloucester County; the Middlesex, North Brunswick and Jamesburg districts in Middlesex County; and the Wallington, Little Ferry and Emerson districts in Bergen County.

Several municipalities where the school districts are located have also signed onto the petition of appeal, as have about 30 taxpayers. The group also claims to represent about 96 underfunded school districts that receive less than 70 percent of the aid they should get.

The petition is an administrative complaint filed with the Department of Education that seeks action to redress the inequities in the school aid awards, claiming they violate the state’s school funding law.

The law calls for aid to be distributed based on a formula created in 2008 during Gov. Jon S. Corzine’s tenure that sets amounts based on enrollment, wealth and populations of impoverished and other special needs students. However, the state has never had enough money to provide districts all the aid prescribed.

Growing districts like Kingsway and Chesterfield have been especially at a disadvantage, as their aid has not kept pace with enrollment increases, causing them to raise property taxes to cover their growing expenses or forgo or cut programs.

At the same time, some districts that have had significant enrollment losses continue to receive large sums of extra money, called "adjustment aid" or "hold harmless aid," which was created to ensure that no districts lost aid because of the formula.

In total, the state has shortchanged districts by about a $1 billion a year, while also awarding close to $700 million to shrinking districts to prevent their aid from decreasing.

The situation helped spark last year’s budget battle, with Senate President Stephen Sweeney pushing for the discrepancies to be addressed by appropriating more money for state aid and by beginning to redistribute the adjustment aid. Former Assembly Speaker Vincent Prieto initially resisted, arguing that no district should lose funding. Eventually, a compromise was reached that saw the state increase its school aid by about $100 million, and also redistribute $31 million in existing aid from so-called overfunded districts.

The changes nearly doubled Chesterfield’s aid to $821,188 for the current school year, but still left the elementary school district some $3.4 million short of what the funding formula prescribes. Likewise, Newton received a $221,748 boost, but its aid is still $4.1 million short of what the formula calls for, according to the petition.

Newton Superintendent Kennedy Greene said the shortfall has forced the district’s taxpayers to make up the difference while those in other districts pay less than their fair share.

“Property tax fairness in this state is an existential issue that must be addressed now,” Kennedy said Friday during a Statehouse news conference attended by officials from Chesterfield, Kingsway and other impacted school districts.

Stephen Edelstein, an attorney representing the petitioning school districts, said the appeal would likely be heard by an administrative law judge, who would recommend a decision for the commissioner of education to accept or reject.

“The numbers speak for themselves and support the arguments that we’re going to make to the commissioner,” Edelstein said, adding that the schools could still file a lawsuit against the state in Superior Court or Appellate Division if the petition is unsuccessful.

“We think we have to go to the commissioner first and exhaust our administrative remedies,” he said.

Officials from the underfunded districts said they would also lobby Murphy and members of the Legislature to finally address the issue.

Several members of the group said they were encouraged by Murphy’s campaign promises to fully fund public schools as prescribed by the funding formula. But they also noted that their districts can’t afford to be idle.

“We’re at a breaking point,” Lavender said Friday. “We need a fix, and we need a fix now.”

Chesterfield Township Committeewoman Andrea Katz said that this year’s increase provided help in preserving staff and programs, but that more funding was needed to stave off future cuts and ensure that class sizes are reasonable.

“We need more money, in whatever way that is,” Katz said. "It could be through advocacy or through lawsuits, but it has to happen.”

Murphy has pledged to raise revenue for schools by restoring an income tax surcharge on earnings over $1 million, and by closing corporate loopholes that allow some companies to skirt paying New Jersey taxes. But his plans may have hit a speed bump in the Legislature, where Democratic leaders are expressing concerns about increasing taxes on millionaires in the wake of the federal overhaul and its new cap on the state and local tax deduction.

Previously, taxpayers in New Jersey were able to write off their state income taxes and local property taxes. The new federal law caps the amounts of both combined at $10,000.

Sweeney, D-3rd of West Deptford, has said the state may need to rethink restoring the millionaires’ tax in the wake of the federal tax law, but he has remained adamant that school funding inequities must be addressed.

"We're going to take school funding head on, and we're going to start making it fair, so you don't have some school districts where they give all their children iPads and others that can't even give the kids books. In a state like New Jersey, it's wrong, and we're going to correct that," he said during the Senate's reorganization last week.

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